Land Reform in China

Most people in China live in rural areas. Although more and more people are moving to the cities, only 40% live in urban areas. As the countryside goes, so goes the nation. And the countryside is trailing. While both have grown, the growth in wealth over the last 30 years has been faster in the cities than in the countryside. Country folk now earn less than a third of their urban counterparts.

In China, land legislation is Georgist. The State claims to own the land. Framers lease the land from the State under 30 year contracts. Since these leases can be sold, they are worth something, and can, in theory, be used to secure a loan. But there is a problem. Farmers are reluctant to make investments in their land when the land can be seized by the local cadre and redistributed in the interest of equality, a process called “readjustment“. Prosterman estimates that there is about $3 trillion worth of “dead capital” in rural China -- land that is not benefiting from the use of capital improvements such as electric pumps and greenhouses, which could make the land more productive and farmers wealthier.

At the outset of his presentation, Prosterman gives a thumbnail sketch of land reform in China. Few people remember that from 1949 to 1956, before collectivization and the Great Leap Famine, the Party made good on their promise to recognize and enforce the full private ownership of peasant farmers. Perhaps it is time for the Party to return to its roots.